Consider the cramifications

How would you like to listen in when federal agencies talk to each other about policies that could have an impact on your company?  If your business is breaking into the mobile marketplace, lend an ear.

The current topic of conversation between the FTC and the Federal Communications Commission:  billing — and especially cramming, the pernicious practice of unauthorized charges on people’s phone bills.  The legal issue isn’t new.  Cramming has been a problem since Alexander Graham Bell got dinged for a mysterious ha’penny charge when he rang Mr. Watson to say “Come here.  I need you.” 

In recent years, the FTC has brought more than 25 cramming cases, winning millions back for consumers.  In 2011, the agency hosted a national workshop to discuss additional fronts in the fight against cramming.  What’s hot now:  a pending civil contempt action against the nation’s largest third-party billing aggregator, asking for $52 million in refunds for consumers the FTC says were victims of cramming.

Based on that experience, the FTC filed a comment with the FCC last year recommending that the FCC implement rules banning or requiring default blocking of some or all third-party billing on landline phone bills.  But as business has moved to the mobile marketplace, crammers have followed.  You may have spotted them on your own cell phone bill in the form of charges for games or horoscope services you didn’t buy.

That’s why the FTC has filed an additional comment with our colleagues across the Mall.  You’ll want to read the 13-page document — it’s short and to the point — but here’s the meat and potatoes of what the FTC said to the FCC:

At a minimum, all wireless providers should offer their customers the ability to block all third-party charges.  Wireless providers should clearly and prominently inform their customers that third party charges may be placed on the consumers’ accounts and explain how to block such charges at the time accounts are established and when they are renewed.  And wireless providers should provide a clear and consistent process for customers to dispute suspicious charges placed on their accounts and obtain reimbursement.  The FTC believes that such measures should be mandated by law or regulation to ensure that consumers have baseline protections.

What about a flat-out ban or default blocking like what the FTC suggested last year for landlines?  According to the comment, that would be premature, given the potential for legitimate uses of the technology in the mobile context.  But the FTC thinks people should have the right to block those charges on their phones and believes this sector warrants “watch what happening” scrutiny to make sure consumers’ interests are protected.

Looking for more information about FTC cases challenging unauthorized charges?  Visit the BCP Business Center's new Payments and Billing page.

 

3 Comments

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Cramming is a serious problem that seems to go on forever. The mobile phone providers invent different ways of introducing games that you are forced to respond to even if this is irrelevant to your business. There is an example of mobile number(Pay As You Go) that I cannot use to call or receive calls from because it is not registered on the Internet. What exactly the charges are for? Fraudulent charges is prevalent and routine. Contracts are now turning to charter to rip consumer off at every possible opportunity. This is the case of a particular mobile provider. The FTC should address this menace and stop it at source. It is almost impossible to estimate the exact amount of billing due to cramming. There is also the case of charges for a duplicate phone number that is hacked from your number. Your phone in reality
does not belong to you. Privacy and security does not exist.

Leslie:

Thank you for you comments. Cramming is indeed a problem, especially when the charges are so minor that they largely go unnoticed on the cell phone bill. In one instance, I could only get a credit for 3 months of disputed charges although the charges went back a year unnoticed. I suggest that consumers should get a full refund and mobile companies should be required to provide proof of consent.

Additionally, there is no current ability for the telcos to block text spammers which is another huge problem. When a consumer gets an unauthorized SMS message, the only way you can opt out is to text back. The problem is that these aggregators put consumers on a list where they get unsolicited text messages from multiple sources so they have to pay for each SMS to opt out. While these may be considered unfair and deceptive trade practices, I wonder if the FTC can apply CAN-SPAM like principals to unsolicited texts?

It's the old "yeah but, we're different." They're not! But as long as carriers can play that game, in confusion, there will be opportunity. Don't let them cOntrol the debate and there won't be any cramming. At some point, intelligent regulators need to take the bull by the horns, and tell the crammers to sit down, shut up and listen.

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